Legislative Analysis
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FORFEITURE OF RETIREMENT BENEFITS FOR http://www.house.mi.gov/hfa
CERTAIN CRIMINAL SEXUAL CONDUCT
Analysis available at
House Bill 4051 as introduced http://www.legislature.mi.gov
Sponsor: Rep. Michele Hoitenga
Committee: Judiciary
Complete to 6-7-21
SUMMARY:
House Bill 4051 would amend the Public Employee Retirement Benefits Forfeiture Act to
provide that a public school employee who is convicted of or enters a nolo contendere plea
for criminal sexual conduct against a student or a minor must forfeit certain retirement
benefits under the Michigan Public School Employees’ Retirement System (MPSERS).
Currently under the act, if after September 4, 2017, a member or retiree of a retirement
system is convicted of or enters a nolo contendere plea accepted by a court for a felony
arising out of his or her service as a public employee, he or she is considered to have
breached the public trust and must forfeit his or her rights to an otherwise vested retirement
benefit and all accumulated employer contributions, including earnings on the employer
contributions, that stand to his or her credit in the retirement system of which he or she was
a member or retiree at the time the felony was committed, if the retirement system was
established by the entity affected by the felony. (A court may forfeit the rights to those
benefits of a person who was convicted or entered a nolo contendere plea for such a felony
before September 4, 2017.)1
The act now defines felony arising out of his or her public service as a public employee
as either of the following:
• A felony resulting from the misuse of public funds.
• A felony resulting from the receipt of a bribe or other financial benefit in that
individual’s capacity as a public employee.
The bill would amend felony arising out of his or her public service as a public employee
to include a felony violation of the criminal sexual conduct provisions (Chapter LXXVI)
of the Michigan Penal Code, if the individual was a public school employee and the victim
was either less than 18 years of age or a pupil of a reporting unit. For purposes of the
requirement that forfeiture applies only to the retirement system established by the entity
affected by the felony, the bill would stipulate that MPSERS is affected by such a felony
regardless of whether the victim was a pupil of the reporting unit where the individual was
employed.
1
September 4, 2017, was the effective date of 2017 PA 43, which among other things made forfeiture mandatory
rather than optional at the court’s discretion. See the HFA analysis of 2017 PA 43 (HB 4131):
https://www.legislature.mi.gov/documents/2017-2018/billanalysis/House/pdf/2017-HLA-4131-B86A917F.pdf
House Fiscal Agency Page 1 of 3
 Public school employee would mean an employee of a public local school district,
intermediate school district, public school academy, or tax-supported community
or junior college. Public school employee would include a public school employee
on an approved leave of absence that does not exceed two years from the date the
employee ceases to accumulate service credit. Public school employee would not
include an employee who is hired but has not yet performed services for
remuneration under an express or implied contract with a reporting unit. Under
certain conditions specified in the Public School Employees Retirement Act, public
school employee could include an employee of a district library or of Eastern
Michigan University, Central Michigan University, Northern Michigan University,
Western Michigan University, Ferris State University, Michigan Technological
University, or Lake Superior State University.
Reporting unit would mean a public school district, intermediate school district,
public school academy, tax-supported community or junior college, or university,
or an agency having employees on its payroll who are members of MPSERS.
Reporting unit would include a university only to the extent that the university has
employees on its payroll who are members of MPSERS.
MCL 38.2702 and 38.2703
BACKGROUND:
A forfeiture order under the act must contain all of the following, as applicable:
• The portion of the member’s or retiree’s retirement benefit under a retirement
system established by that individual’s employer at the time the act or acts that
resulted in the felony were committed that accrued to the member or retiree on or
after the date the first act that resulted in the felony was committed is forfeited.
• The member’s or retiree’s accumulated contributions standing to that individual’s
credit in the individual account established for that purpose in the retirement system
must be refunded to the member or retiree.
• Except for a retirement benefit that is a benefit from employer contributions to a
defined contribution plan forfeited above, the retirement system shall pay to an
individual, if any, who would otherwise be a beneficiary of the member or retiree
whose retirement benefit is being forfeited under this act an actuarially equivalent
monthly retirement allowance at the age the member or retiree would have become
eligible for unreduced retirement benefits under that retirement system.
• The retirement system shall provide hospitalization and medical coverage
insurance to the member or retiree whose retirement benefit is being forfeited under
this act and to his or her beneficiaries in the same manner and under the same
restrictions as is provided to other retirees and beneficiaries of that retirement
system.
House Fiscal Agency HB 4051 as introduced Page 2 of 3
FISCAL IMPACT:
The bill would have an indeterminate fiscal impact but could create a savings for MPSERS,
local reporting units, and the state.
Any cost savings would be contingent on the number and scope of forfeiture actions as a
result of the new requirement that a public school employee who is convicted of or enters
a nolo contendere plea for criminal sexual conduct against a student or a minor as noted
above forfeit certain retirement benefits. There are no data available with which to estimate
the number of potential forfeitures to which the new provisions might apply, and any
savings would depend on the amount of employer contributions plus investment returns
that had accumulated toward certain retirement benefits. Currently in a forfeiture situation,
the state deposits forfeited defined contribution (DC) funds into a forfeiture account, which
is the same account used to collect funds from employee DC accounts for employees who
leave prior to vesting in their employer-paid benefits. These funds are then used to offset
mandatory employer contributions, and thus create a savings to the state and local reporting
unit. Funds retained by the pension system as a result of a forfeiture presumably would
accumulate to the benefit of the whole pension plan.
Legislative Analysts: Emily S. Smith
Rick Yuille
Fiscal Analysts: Samuel Christensen
Jacqueline Mullen
Emily Hatch
Ben Gielczyk
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations, and does not constitute an official statement of legislative intent.
House Fiscal Agency HB 4051 as introduced Page 3 of 3


Statutes affected:
House Introduced Bill: 38.2702, 38.2703